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Federal Communications Commission FCC 11-161 1 Federal Communications Commission FCC 11-161 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Connect America Fund ) WC Docket No. 10-90 ) A National Broadband Plan for Our Future ) GN Docket No. 09-51 ) Establishing Just and Reasonable Rates for Local ) WC Docket No. 07-135 Exchange Carriers ) ) High-Cost Universal Service Support ) WC Docket No. 05-337 ) Developing an Unified Intercarrier Compensation ) CC Docket No. 01-92 Regime ) ) Federal-State Joint Board on Universal Service ) CC Docket No. 96-45 ) Lifeline and Link-Up ) WC Docket No. 03-109 ) Universal Service Reform – Mobility Fund ) WT Docket No. 10-208 REPORT AND ORDER AND FURTHER NOTICE OF PROPOSED RULEMAKING Adopted: October 27, 2011 Released: November 18, 2011 Comment Date on Sections XVII.A-K: January 18, 2012 Reply Comment Date on Sections XVII.A-K: February 17, 2012 Comment Date on Sections XVII.L-R: February 24, 2012 Reply Comment Date on Sections XVII.L-R: March 30, 2012 By the Commission: Chairman Genachowski and Commissioners Copps and Clyburn issuing separate statements; Commissioner McDowell approving in part, concurring in part and issuing a statement. TABLE OF CONTENTS Heading Paragraph # I. INTRODUCTION ................................................................................................................................1 II. EXECUTIVE SUMMARY.................................................................................................................17 A.Universal Service Reform...................................................................................................................17 B.Intercarrier Compensation Reform .....................................................................................................33 III. ADOPTION OF A NEW PRINCIPLE FOR UNIVERSAL SERVICE .............................................43 IV. GOALS ...............................................................................................................................................46 V. LEGAL AUTHORITY .......................................................................................................................60 VI. PUBLIC INTEREST OBLIGATIONS...............................................................................................74 A.Voice Service ......................................................................................................................................76 1 Federal Communications Commission FCC 11-161 financial incentives to ensure compliance.”1274 We note that commenters advocating for additional enforcement measures such as financial penalties provide no sufficient reason that the Commission’s existing enforcement mechanisms are inadequate to address any rule violations.1275 We also note that a phantom traffic-specific penalty rate or other financial penalty provision would likely divert additional industry and Commission resources to disputes over the applicability and enforcement of the penalty rate. Based on the availability of the Commission’s existing enforcement mechanisms, we think it is unlikely that any benefits of an additional phantom-traffic specific enforcement mechanism will outweigh its costs. Therefore, we decline to adopt a “penalty rate” or other financial punishment in connection with phantom traffic. 734. Parties also proposed that the Commission allow selective call blocking, which would permit carriers in the call path to block traffic that is unidentified or for which parties refuse to accept financial responsibility.1276 We decline to adopt any remedy that would condone, let alone expressly permit, call blocking.1277 The Commission has a longstanding prohibition on call blocking.1278 In the 2007 Call Blocking Order, the Wireline Competition Bureau emphasized that “the ubiquity and reliability of the nation’s telecommunications network is of paramount importance to the explicit goals of the Communications Act of 1934, as amended” and that “Commission precedent provides that no carriers, including interexchange carriers, may block, choke, reduce or restrict traffic in any way.”1279 We find no reason to depart from this conclusion. We continue to believe that call blocking has the potential to degrade the reliability of the nation’s telecommunications network.1280 Further, as NASUCA highlights in its reply comments, call blocking ultimately harms the consumer, “whose only error may be relying on an originating carrier that does not fulfill its signaling duties.”1281 735. Other Proposals. Finally, parties proposed that the Commission should impose rules surrounding the proper look-up1282 and routing for traffic.1283 Because these proposals are unrelated to the Commission’s limited phantom traffic objectives related to signaling, and because we find little evidence 1274 GVNW Section XV Comments at 6; see also Frontier Section XV Comments at 12; WGA Section XV Comments at 5. 1275 See supra note 1267. Although we decline to adopt any specific enforcement mechanism related to phantom traffic and continue to believe our existing enforcement mechanisms are adequate, we will monitor this issue and, if necessary, may determine that additional measures are appropriate. 1276 See, e.g., Frontier Section XV Reply at 9; Missouri Commission Section XV Comments at 9; RNK Communications Section XV Comments at 9. 1277 We note that at least two states currently allow for blocking of intrastate traffic in certain circumstances. See Missouri Commission Section XV Comments at 9; Ohio Commission Section XV Comments at 11-12. 1278 See Call Blocking Declaratory Ruling, 22 FCC Rcd at 11629, 11631 paras. 1, 6; see also Blocking Interstate Traffic in Iowa, Memorandum Opinion and Order, 2 FCC Rcd 2692 (1987) (denying application for review of Bureau order, which required petitioners to interconnect their facilities with those of an interexchange carrier in order to permit the completion of interstate calls over certain facilities). 1279 Call Blocking Declaratory Ruling, 22 FCC Rcd at 11631, para. 6. 1280 Id. at 11631, para. 5 (internal citation omitted). 1281 NASUCA and NJ Rate Counsel Section XV Reply at 11. 1282 See, e.g., CenturyLink Section XV Comments at 24. 1283 See, e.g., Aventure Section XV Comments at 7-9; Rural Associations Section XV Comments at 29-30. 241 Federal Communications Commission FCC 11-161 (ii) Other Pending Matters 975. Our conclusions in this Order effectively address, in whole or in part, certain pending petitions. For one, Global NAPS filed a petition for declaratory ruling regarding the manner and extent to which VoIP traffic could be subject to access charges generally, and intrastate access charges in particular.2044 AT&T also filed a petition requesting that, on a transitional basis, the Commission declare that interstate and intrastate access charges may be imposed on VoIP traffic in certain circumstances, as well as limited waivers that would enable it to offset forgone revenues from voluntary reductions in intrastate terminating access charges.2045 In addition, Vaya Telecom (Vaya) filed a petition seeking a declaration that “a LEC’s attempt to collect intrastate access charges on LEC-to-LEC VoIP traffic exchanges is an unlawful practice.”2046 Because our transitional intercarrier compensation framework for VoIP-PSTN declines to apply all existing intercarrier compensation regimes as they currently exist, Global NAPS’s and Vaya’s petitions are granted in part and AT&T’s is denied in part.2047 To the extent that AT&T proposes a specific approach for alternative rate reforms and revenue recovery, we find the mechanisms adopted in this Order to be more appropriate for the reasons discussed above, and thus deny its requests in that regard.2048 Further, Grande filed a petition seeking a Commission declaration that carriers categorically may rely on a customer’s certification that traffic originated in IP and therefore is enhanced and not subject to access charges.2049 To the extent that this would deviate from the regime we adopt, the petition is denied.2050 We decline to address the classification of VoIP services generally at this time, nor do we otherwise elect to grant the other requests for declaratory rulings raised by the Global NAPS, Vaya, AT&T, and Grande petitions.2051 XV. INTERCARRIER COMPENSATION FOR WIRELESS TRAFFIC A. Introduction 976. In this section, we address compensation for non-access traffic exchanged between LECs and CMRS providers. As discussed further below, two compensation regimes currently apply to non- access LEC-CMRS traffic. Under section 20.11, LECs have a duty to provide interconnection to CMRS providers and LECs and CMRS providers must pay each other “reasonable compensation” in connection with traffic that originates on the other’s network.2052 Under the reciprocal compensation regime in 2044 See Global NAPS Petition for Declaratory Ruling and for Preemption of the PA, NH and MD State Commissions, WC Docket No. 10-60 (filed Mar. 5, 2010). 2045 See AT&T Petition for Interim Declaratory Ruling and Limited Waivers, WC Docket No. 08-152 (filed July 17, 2008). 2046 Petition of Vaya Telecom, Inc. Regarding LEC-to-LEC VoIP Traffic Exchanges, CC Docket No. 01-92 at 1 (filed Aug. 26, 2011). 2047 See generally supra Section XIV.C.1. 2048 See supra Section XIII. 2049 See Grande Petition for Declaratory Ruling, WC Docket No. 05-283 (filed Oct. 3, 2005). 2050 See generally paras. 964-966 (establishing an approach under which terminating carriers can use interconnection agreements to obtain compensation for
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